Wednesday, November 2, 2011

Sweet tea, please. Hold the Silicon.

By Matthew Tester, Project Associate.

Start-ups of the American South have been getting some good coverage the past couple weeks as The Atlantic’s special report series,Start-Up Nation, has taken a meandering tour from Virginia to Louisiana in search of “the next Silicon Valley.” The remarkable communities and businesses along the way (shout-outs to client communities Richmond and Charlotte!) proved that you don’t have to be in Silicon Valley or Research Triangle Park to compete in the start-up realm. With profiles of key regional hubs and interesting businesses interspersed with broader reporting on the state of innovation in the South and across U.S., it’s definitely worth your time to check out the series.

The contributors find that while venture capital investment – that inexorable indicator of start-up activity – is still heavily concentrated in Silicon Valley, start-up culture is undoubtedly spreading. Richard Florida cites a variety of driving factors: necessity borne of an economy in shambles; lower capital requirements; a modular economy in wherein critical functions are contracted out; the internet; better technological tools; and a library of instructive examples.

Another key finding is that Southern cities are learning to trade on their inherent cost advantages and to create new ones through public investment. Many communities are using tax incentives, incubators, and soft support to encourage start-up activity and mitigate risk. And mitigating risk or the perception of risk is critical to activating the creatives and do-it-yourself-ers in your town. Paul Graham, founder of start-up funding mechanism YCombinator, notes that places failing to create an environment encouraging start-ups are effectively spraying “startupicide” on potential new businesses. Recognizing the importance of that environment is the first step Southern communities can make in competing with the Silicon Valley’s and research hubs of the world.

My favorite thing about the series is that it picked up on the local flavor infused in each region’s start-up scene. I consider it significant that “to build a company in one of these places is to become a part of it,” as the series’ final dispatch suggests. If, rather than making commerce place-less, the technology tools of the internet age enable us to connect deeply with our own communities and others, then the dawn of the Start-Up Age in the South is something to welcome indeed.